Good afternoon, ladies and gentlemen, and welcome to CIMB Group's financial results briefing for the first quarter of 2026. Our host today is CIMB Group CEO, Novan Amirudin, and Group CFO, Khairul Rifaie.

My name is Steven from the CIMB IR team. You should have received the latest analyst presentation and financial statements via email from CIMB Group Investor Relations.

Otherwise, you may find the documents in the IR section of our website at cimb.com. Please be informed that this briefing is being recorded.

Also, please include your name and company on the Teams app to allow us to identify you. All participants' lines are currently on mute, and you will have the opportunity to ask questions after the presentation by using the raise hand function.

At this juncture, I would like to hand over the briefing to Novan and Khairul. Novan, over to you.

Thank you, Steven. It's been a resilient first quarter '26 performance for CIMB Group despite the various headwinds that we saw, whether is it on the geopolitical side or even on FX.

If you look at the table on the left-hand side, the year-on-year impact on FX to our group as a result of the depreciating currencies in ASEAN, for example Indonesian rupiah and Thai baht vis-a-vis the ringgit, has led to about a 5% impact to our group. Nonetheless, despite all these headwinds, I'm pleased to announce that it has been a resilient first quarter for us.

Operating income is flat at 5.4 billion ringgit when we compare quarter-on-quarter. The reason for this resilient performance, despite the headwinds that we saw, especially on FX as well as the geopolitics, are basically the strong performance in NOII.

If you look at the table on the left, NOII saw a 11.9% quarter-on-quarter increase from 1.5 billion ringgit last quarter to 1.7 billion ringgit this year. This is really driven from both an increase in our fees and commissions by 4% quarter-on-quarter, as well as trading and FX, an increase 17.5% quarter-on-quarter.

With regards to trading and FX itself, it saw both increases in terms of our trading business, as well as our treasury client sales, in which we will discuss further later. On the NII side, there was a quarter-on-quarter decline of about 5%, year-on-year 3.6%, but if we look at it on a constant currency basis, it actually grew by 1.4%.

This decline was as a result of a compression in NIM for group of about 2 basis points. We actually saw expansion in Malaysia, Singapore, and Thailand.

The compression of 2 basis points was as a result of our business in Indonesia. Nonetheless, with what we are seeing today, Malaysia, Singapore, Thailand has seen expansion, there is a 50 basis points hike in Indonesia that recently got announced.

Based on the current economic situations each of the markets that we operate in, we are expecting this NIM compression to bottom out. With regards to our asset growth, whether is it securities or loans, the pipeline remains strong, and we also saw decent, healthy growth in the first quarter.

Asset and loans grew 1.1% to 1.3% quarter-on-quarter on a constant currency basis. More importantly, if you zoom into some of the respective markets, Malaysia, for example, saw loans growth of 5.9%, and Singapore seeing loans growth of 3.5%.

When we look at the overall first quarter performance when it comes to income, we see very strong NOII. We see NII, despite being challenged in the first quarter due to NIM compression, that NIM compression is bottoming out and we're seeing early signs of that already.

More importantly, the asset and loan growth to power this NII growth is still growing healthily and we continue to see a strong pipeline. Moving down the profit and loss to our operating expenses, I think this is one area where the group has been relentless on becoming simpler, better, and faster throughout the group as part of Forward30.

This cost discipline is showing. I'm pleased to announce that our opex actually declined by 5.5% quarter-on-quarter and even 2.6% year-on-year.

This led to our CIR improving to 47.2%. This is not at the expense of our investments in technology.

That is something that we continue to do with our tech CIR at 8.2%, within our 8% to 9% guidance. Moving now to asset quality, despite the current headwinds that we're seeing, asset quality continue to remain strong.

GIL maintains at 1.7%, same level as fourth quarter last year. First quarter '25 was actually 2.2%.

Asset quality continue to remain strong. We do have a limited direct exposure to the Middle East, while we continue to assess potential second-order impacts to our group.

At the moment, I think we are very comfortable. We run a lot of scenario analysis on what the potential second or even third-order impacts would be, but at this point in time, our portfolio remains strong.

Lastly, on capital, this remained robust, with CET1 at 14.3%. This is a very important part of Forward30.

We continue to be very disciplined with our capital allocation. You saw that in November last year when we announced the capital return program.

You saw that just a few weeks ago when we announced the divestment of our CIMB Thai auto loan business. We continue to be disciplined with regards to capital allocation, and we're very, very firm about not growing at all costs.

There have been some M&A opportunities that we have evaluated. We always evaluate opportunities.

We're very disciplined in terms of ensuring that we only will invest and grow at the right price. This is a discipline that we continue to have.

Next page, please, Steven. A recap of our Forward30 strategic plan anchored around purpose of advancing customers and society, it's all about the 4Cs.

Our capital and resources, where we continue to reallocate to grow, you saw that when we announced the capital plan, you saw that when we did the divestment of Thai auto business; our second C, CASA, all about building a strong deposit franchise to reduce cost of funds; our third C, cross-sell, all about increasing returns, you saw the strong performance in NOII; and the fourth C, capabilities, just becoming simpler, better, and faster, and you saw that in the reduction of our operating expenses, which led to an improvement of our cost-to-income ratio. Next page, please.

I will now take you through an update on the key areas that we have worked on with regards to each of the 4Cs in the first quarter. On the capital side, as I mentioned earlier as well as we presented during the announcement of the divestment of the Thai auto loan portfolio, we continue with our transformational change to win in Thailand.

You saw us exiting that non-core sub-scale business. There is an operating model change to sharpen our focus towards wealth and wholesale.

The sales proceeds that we get from selling this portfolio will be used to repay high funding costs in Thailand. Part of it will be used to grow the wealth and wholesale segments in Thailand, and the balance, and we budget this to be about 11 billion Thai baht worth of capital, to be returned to the group.

With regards to innovation, we are currently in a pilot together with SC and Bursa Malaysia to come up with investment options for Shariah-compliant investors to participate in the Malaysian banking sector. This is something that we are working on and hopefully, we can launch pretty soon.

Second C, with regards to CASA, the whole focus on a deposit franchise and deposit-led strategy has allowed us to reduce our cost of funds, 44 basis points year-on-year and 7 basis points reduction quarter-on-quarter, which then allowed us to sort of defend our NIM to only a 2 basis points compression. This is really coming from our strong growth in deposits as well as our reduction in LCR.

If you look at the chart on the right-hand side, this to show to you why we are confident that we're seeing signs of NIM bottoming out. If you look at the markets of Malaysia, Singapore, and Thailand, it has certainly bottomed out from the third quarter of last year, and it continued to expand in the first quarter this year.

We are also seeing similar trends or early signals of similar trends on this in Indonesia. Next page, please.

Our third C, cross-sell, this is something that we continue to push, as evident in the growth in the NOII in the first quarter. Fee and commission income is up 4% quarter-on-quarter.

Treasury client sales continued to increase, it was up 1% quarter-on-quarter and 2.2% year-on-year. Our wealth AUM year-on-year continued to increase, and our number of wealth customers backing up this wealth AUM is also increasing.

We also, during the quarter, announced a strategic partnership with Ant International, who are our partners in Touch 'n Go today, where we are working on innovations with regards to cross-border payments as well as treasury and liquidity management solutions. This is something that we're quite excited about to announce to the market when this is ready.

Our fourth C, with regards to capabilities, we are relentless on becoming simpler, better, faster, and therefore this is clear in the reduction of our overhead expenses, which then led to a reduction in our cost-to-income ratio, but not at the expense of investments in technology and data. This continued to be within the 8% to 9% guidance that we've been providing every year.

With that, I will now hand it over to Khairul to dive deeper into our financial performance. Over to you, Khairul.

Thank you, Novan, and good afternoon. Key highlights of first quarter on slide 8 are some three additional points to what was already presented.

Firstly, if you look at the robust trading and FX component that's really driven our NOII proportion to total income significantly during the quarter, it expanded to 31.9%. Secondly, if you look at the PBT performance across all of P&L has been impacted by the FX translation.

Excluding the FX impact on a constant currency basis, our PBT grew on a year-on-year basis by 1.6% growth. Lastly, on this slide, if you look at the loan loss charge record number in terms of 31 basis points what we recorded in first quarter, that is well within our guidance of 25 to 35 basis points.

Next slide. On slide 9, in terms of the key business highlights, as what we highlighted earlier, we reported strong underlying performance.

If you look at it from a PPOP constant currency basis, that grew very well, QoQ and also year-on-year. Within that number, you can see Indonesia and Singapore growing well both on PPOP and also operating income, growing at 8.1% and 5.9% respectively on a year-on-year basis.

If we then also break it down between the two P&L lines, you can see NII growing at 1.4% year-on-year. Similarly, NOII recording a stronger growth at 8.4% year-on-year.

Given the very strong cost discipline that we have executed in the first quarter, this gave us a very good operating leverage, driving a year-on-year PPOP growth of 27 2.7% year-on-year on a constant currency basis. Moving on to the highlights on segment by PBT on slide 10.

Firstly, on consumer, the QoQ growth was impacted in terms of the NIM pressure coming out from the loan and also a very strong FD growth. Another impact is that during the fourth quarter last year, we had a writeback related to MEF and also overlays.

However, if you look at it from a wealth perspective, that remains strong during the first quarter, and that also drove a very good NOII growth both on a QoQ and year-on-year basis. The year-on-year contraction in PBT also to a certain extent is also driven by the same factor on a QoQ basis, and that is the writeback that we recorded last year during the first quarter last year related to a model enhancement.

Wholesale banking, a very good top-line growth during the quarter, driving a very strong PPOP growth of about 10 10%. However, last quarter, we had some writeback coming through in Indonesia, the absence of that driving the QoQ PBT lower.

Similarly, on a year-on-year basis, we also had a higher writeback coming through from Indonesia in the first quarter of last year. In addition to that, the year-on-year performance was slightly impacted by a moderate top line for wholesale banking.

Commercial banking, both QoQ and year-on-year was driven by the current year first quarter writeback on ECL coming through from Malaysia and Indonesia. This is a recovery that came through, a reflection of the asset quality and our recovery efforts.

One point on the year-on-year, apart from the ECL writeback that was recorded this year, NIM was improved on a year-on-year basis given the strong CASA growth that we recorded for around 10% year-on-year. CBE and group funding overall, Touch 'n Go Digital and Touch 'n Go continued with strong performance during the first quarter.

However, on a QoQ sequential basis, the PBT was impacted due to the writeback on bonuses that we recorded during the fourth quarter, the absence of that impacted the PBT performance. Moving on to slide 11, firstly on Malaysia, very good NIMs as what we saw in terms of the trajectory for Malaysia, both year-on-year and QoQ.

That drove Malaysia's NII by 5.4% year-on-year. However, within the Malaysia context, trading and FX was down year-on-year and QoQ, and in the fourth quarter last year as well, we had some lumpy other income.

I think it's important to highlight here in terms of Malaysia's performance, credit cost for Malaysia was flattish both on a QoQ and year-on-year basis. Singapore, very strong underlying and robust growth.

PPOP grew by 6% year-on-year, driven by both wealth and also strong treasury and markets. However, last year in the fourth quarter and in the first quarter, we had higher ECL recoveries and writeback.

In Indonesia, despite the challenges that we have in terms of the macro backdrop driving slightly moderate or weaker growth in NIMs, fees and trading and FX was strong, driving good PPOP growth on a QoQ basis. On ECL, similar to Singapore, last year in first quarter and fourth quarter, the ECL had a higher writeback, impacting the year-on-year PBT growth.

Thailand, the transformation is ongoing and executing well. We had cost coming down on a QoQ and year-on-year basis.

In addition to that, trading and FX was also strong, driven by the good markets, driving the overall PBT performance both QoQ and year-on-year. On slide 12, breakdown of the P&L firstly on NII, as what you saw earlier, you can see group NIMs really bottoming out.

Just to explain in terms of the drivers for the QoQ NIM performance, Malaysia, that slight expansion is really driven by cost of deposits coming down, and this is both driven by our CASA expanding significantly for the quarter, and also the more expensive term-loan deposit that was on our book last year coming off to a lower rate. In Indonesia, the contraction driven by two things.

One, there were some one-off adjustment that impacted the interest expense during the current quarter. In addition to that, some underlying pressure on loan yields.

If you exclude some of the one-off adjustment, the contraction is significantly smaller than what is reported here. Thailand and Singapore, the same drivers of that margin expansion.

This is really our optimization in terms of some of the more expensive deposits and with that also some of our expensive CASA campaigns. We ended some of that to optimize our NII, and you'll see that later some of CASA growth being impacted in Singapore and Thailand, and that was intentional.

On the year-on-year variance, Malaysia, really our proactive and preemptive sort of strategy in terms of our liability management helping us sustain the level of NIMs for Malaysia on a year-on-year basis, given the headwind that we had in July on the policy rate cut. In Indonesia, Singapore, and Thailand, all three countries were heavily impacted in terms of the policy rate movements, therefore driving that NIM contraction.

In addition to that, in some of the markets we did have a very high competition in terms of deposits, in particular Indonesia especially in the first half of last year, impacting the overall 12-month year-on-year number. Slide 13 on NOII.

This is where you can see we had a very robust trading and FX number or achievement during the first quarter. In addition to that, if you look at the fees, that also grew up quite well at 5.4% QoQ, driven by wealth in Malaysia and Indonesia.

Breaking down the trading and FX, both client franchise and trading grew, but of course the trading number is a lot higher in terms of the growth driver. On a year-on-year basis, the fees and other income, that's mainly driven by Singapore bancassurance that continued to be growing well.

That is offset slightly by weaker fees in other business segment. On the trading and FX component, that's mainly driven by Indonesia, Singapore, and Thailand, fully offsetting some weakness on the trading and FX in Malaysia.

Breaking it down between the two, both are growing well, both on the treasury client sales and also the trading component on a year-on-year basis. Slide 14 on opex, like what we mentioned, we exercised very strong cost controls, and that has driven costs to be lower QoQ and also year-on-year.

There is some seasonal impact coming through in the fourth quarter and that drove some of the numbers lower. If you look at marketing and admin and general, there were some catch-up in terms of the expenses during the fourth quarter.

However, if you look at personnel expenses, we also had a fourth quarter writeback of bonuses, the increase is really because of the absence of that writeback. If you normalize for all those seasonal factors on a QoQ basis, the underlying opex is broadly stable at this 2.5 2.5 billion ringgit level.

On a year-on-year basis, very good containment of costs, contracting by 1 1%. You can see personnel costs flattish.

The lower growth in establishment and marketing is really the driver of our tactical cost saving into those two lines. Technology, we continue to invest, recording a flattish growth year-on-year.

On slide 15 on asset quality, this remains strong and stable. Firstly, in terms of the recoveries, this is lower QoQ and also year-on-year.

Firstly, we did have a higher recovery coming through in Indonesia for both first quarter 2025 and also fourth quarter 2025 2025. Obviously, during the fourth quarter '25, the recovery coming through in Indonesia was a bit more significant.

I would describe this quarter be more of a BAU level of recoveries both on the non-retail, and consumer has been fairly stable on a QoQ basis in terms of recoveries and write-offs. In terms of the non-retail number, if you look at the fourth quarter last year and first quarter last year, we did put in some overlays.

In the fourth quarter last year, it was related to corporate segment. In the first quarter last year, it was related to the trade war, some overlays inflated a bit some of those numbers on the non-retail side.

On retail, the number, the increase on a year-on-year and QoQ basis is really driven by the timing of some of our writebacks on overlays and MEF and the reallocation of that, just to highlight in the first quarter of 2025, there was a model employment, and that led to some writebacks coming through the first quarter 2025. You can see, in terms of the gross impaired loans ratio, that has remained stable, but a very consistent improvement from last year.

Loan loss charge at 31 basis points is well within our guidance of 25 to 35 basis points. Allowance coverage remains very well, comfortably above 100%.

I would like to also highlight here that in terms of our overlay, we have not yet made any new forms of overlay in particular coming through from the potential impact from the macro uncertainty coming out from the Middle Eastern tension. We have not done any of those new overlays in the first quarter 2026.

We are reviewing whether we are going to need or whether we're going to do any preemptive provisioning or overlays related to that in the second quarter or potentially third quarter. Slide 16 on total asset growth and debt securities.

You can see, in terms of total asset, that is growing well on a constant currency basis, driving that is debt securities in Malaysia, growing at 1.8% QoQ and also 6.9% year-on-year. Singapore contracted QoQ, and that's driven by a significant maturity that came through during the quarter, and we have not yet deployed the mature liquidity that we have gained, and it's still at the moment sitting as cash and waiting for the right opportunity to deploy.

On slide 17 on gross loans overall, this is driven by wholesale banking. If you recall, during our third quarter announcement, we did mention that our pipeline is strong, and that has come through in the fourth quarter and also in the first quarter, it has been good momentum on wholesale banking over the past two quarters.

The outlook, as well, there still remains a fairly decent pipeline going forward. You can see under wholesale banking, that 30% growth is driven by Malaysia, Thailand, and Singapore.

In consumer banking, that negative growth is mainly driven by Thailand and Indonesia, whereas in Malaysia and Singapore consumer, the growth has continued to be supportive. In commercial banking, that contraction QoQ is mainly driven by Indonesia.

Within the countries, if we look at Malaysia, that's driven by wholesale banking growing by 11% year-on-year and consumer banking growing at 4% year-on-year. Indonesia, GWB growing at 5% year-on-year.

Singapore, consumer growing very strongly, especially on wealth financing, growing at 11% year-on-year, whereas Thailand, that negative growth is really given the backdrop of the environment on the consumer segment. On deposit on slide 19, this is really about our good growth in terms of the underlying CASA, especially driven by wholesale banking.

You can see, in terms of the total CASA growth QoQ and year-on-year, that remains good. Within the wholesale banking number, CASA growth was 12.5% QoQ.

Some of it is short term, given the requirements of our clients, and it is flighty and will likely come off in the coming quarters. However, it did benefit our cost of funding during the first quarter.

Consumer banking, within that negative number, it is intentional. Like what I mentioned earlier, this is optimizing our cost of funds in Singapore and Thailand related to some of the campaign CASA that we have.

Within this number, Malaysia CASA grew well at 1.1% QoQ. Commercial banking, although on a quarterly basis is weak, and that's typical during the first quarter for commercial banking, you can see on a year-on-year basis, the growth for deposit is strong, and that's driven by CASA in Malaysia in commercial banking growing at 10% year-on-year.

You can see the wholesale banking CASA growth driving the CASA ratio expansion in Malaysia. The contraction in CASA ratio in Singapore is driven by our intention to optimize the CASA campaign rates in Singapore in consumer.

On slide 19 on capital, our capital ratios remains very stable. Our liquidity ratios all remain strong and stable or improving across the board.

By segment, if you look at consumer banking firstly, the contraction is really driven QoQ is really driven by the margin contraction. NII still remains good.

Another partial offset is that cost controls remains very strong, and that drove our PPOP growth higher QoQ. However, the ECL has picked up during the quarter because of the overlay writeback that we recorded in fourth quarter 2025.

Similarly, year-on-year, ECL increased because of the ECL writeback related to the model deployment. In terms of loan growth, that's really driven by Malaysia going at 4% year-on-year.

In terms of deposits, CASA still remains good. Indonesia CASA grew by 5.5% year-on-year.

Malaysia CASA grew by 4% year-on-year. Commercial banking on slide 21, top-line growth was fairly moderate QoQ.

However, if you look at the year-on-year numbers, that what I mentioned, the NIM did expand because of the strong CASA growth, especially in Malaysia. However, both on QoQ and year-on-year, the NOII is down, driving that moderate or slightly weaker growth in terms of operating income.

Where it remains strong is in terms of asset quality, and the recovery that we recorded in Indonesia and Malaysia during the first quarter this year drove the PBT growth overall. In terms of loans ex-FX, that's fairly moderate at 2.9%, with Malaysia being fairly flattish year-on-year.

In terms of deposits, very strong growth in terms of CASA. On slide 22 on wholesale banking, we did record a very strong and robust QoQ top-line performance.

However, because of the higher recoveries both in the fourth quarter and also first quarter last year, that impacted the PBT growth overall. In terms of loan growth, like what I mentioned earlier, Malaysia was very strong, growing at 11% year-on-year.

Deposits really driven by CASA, especially in Malaysia and also to a certain extent Indonesia. Digital assets and group funding on slide 23, in terms of the PBT contraction QoQ, that's really driven by the higher costs because of the accruals that we made for the writeback in terms of the bonuses that we recorded during the fourth quarter, the normalization of that drove the PPOP being weaker overall.

In terms of the year-on-year performance, that's strong, driven by the lower ECL. Touch 'n Go Digital remains profitable since first quarter 2025, and the trajectory remains positive during the first quarter.

We have now disclosed, as well, the total payment value in billions as a better reflection of the revenues. You can see a very good growth and strong growth from the TPV almost doubling, coming out from the first quarter last year to the current number of 76 billion.

The momentum is very positive for Touch 'n Go Digital. For CIMB Philippines, as what we highlighted, we are recalibrating some of our risk appetite in CIMB Philippines, and that has resulted in the loan book contracting by 11% year-on-year.

However, in terms of the customer momentum, that still remains positive, at about 11% growth year-on-year. Lastly, on Islamic on slide 26, good growth both on PBT, both on QoQ and year-on-year.

On a QoQ basis, that's driven by lower opex, and on a year-on-year basis, driven by some of the lower opex on the recoveries. On Islamic financing, that continues to outpace the conventional side, and it's mainly driven by mortgages.

In the Islamic deposit space, apart from FDs, CASA also grew strongly on Islamic at 15.6% year-on-year. That's the end of the financials.

Thank you, and I pass the presentation back to Novan for closing.

Thank you, Khairul. In conclusion, we are maintaining our 2026 guidance, despite the current volatilities observed in the first quarter.

The main reasons are we are seeing asset and loan growth continue to be resilient. There is a healthy pipeline that is being observed at the moment.

We are seeing early signs of NIM compression for the group bottoming out. We're already seeing expansion, as I showed earlier, in Malaysia, Singapore, and Thailand, and we are seeing signs of Indonesia improving.

In terms of cross-sell and trading income, this is the strongest part of the business, it's seeing very strong double-digit quarter-on-quarter growth, year-on-year growth, both in terms of business from our client franchise, as well as from our own trading books. Lastly, we're going to be continuing to be relentless to be simpler, better, faster, exercising tremendous cost discipline throughout the group, as you saw in the declining cost numbers, while asset quality will be maintained.

In terms of key risks that we face, firstly, it's FX headwinds, we are seeing currencies outside Malaysia relative to the ringgit depreciating over the last many months, we saw that from Indonesia, we saw that in Thailand, to some extent Singapore, vis-a-vis the ringgit. These headwinds will be cyclical, but it is significantly impacting our consolidated earnings.

The other key risk that we are observing very, very closely is the impact of rising inflation to our customers, as well as to our own business, as a result of the current dislocation in supply chain, increased fuel prices, and so on. All in all, on balance, we are maintaining our 2026 guidance.

With that, I will end here and happy to take any questions that you may have.

Thank you, Novan and Khairul. We will now begin the Q&A session.

If you would like to ask a question, please use the raise hand function, and we will unmute your line. Our first question comes from Tushar from Nomura.

Tushar?

Hi, thank you for taking my questions. Firstly, I just wanted to ask, what are you seeing on the ground with regards to asset quality, as it has now been a couple of months, prices have stayed high, there is some supply disruptions, while Malaysia still has a lot of subsidies, but some businesses have started to see higher diesel price, electricity costs, etc.?

Just wanted to ask, for this 25 to 35 basis points credit cost guidance to hold, by when do we need to see some real ceasefire, reduction in things like oil prices, etc.?

Tushar, I think just firstly just to provide some context, right, even from the very start of the conflict, we did multiple scenario analysis based on various assumptions on the macro backdrop. Some are relatively decent, but some are very conservative and very stressed.

We've done all those areas and we looked at what are the probabilities of that. In terms of on the ground itself, so far even though a couple of months have passed and there are some pressure in terms of diesel price like what you mentioned, we have not seen any signs of deterioration yet on the ground.

Our R&R numbers are still fairly stable. Just to provide a bit more color from that perspective, we did see some delinquency rising on some consumer segment in March, and we did think that it was due to the seasonal impact for Eid or Raya, and that turned out to be true where we saw that improvement coming through in April.

Some of the numbers on the household segments on delinquency in Malaysia has recovered to pre-March. We haven't seen any underlying pressure yet coming through from this.

To your point on our 25 to 35 basis points guidance, I just want to also recap that, last year, we did put in quite a decent amount of overlays related to the trade war around the same time, this time around last year. That is also, somebody will put it inflationary pressure.

Our observation period of that is coming to an end, almost to an end now, and we haven't utilized any amount of that overlays. We will then need to reassess whether the uncertainty coming from the Middle East would need overlays, and we can reallocate customer overlays related to the trade war to this component.

That's where, for now, we are maintaining our 25-35 basis points guidance. We will need to see how the macro backdrop further evolves from here, but based on our base case, we believe that our overlays are sufficient to be replenished to a new form of emerging risk.

I will just add on to that. We've also been very deliberate over the last few years in terms of reshaping our loan book.

We exited the commercial business in Thailand. We've ramped down and turned around the commercial business in Indonesia, as well as in Singapore.

We've been very deliberate in terms of shifting a lot of our portfolio mix into higher-quality segments. Therefore, that's one of the other reasons why we're still seeing a very resilient asset quality despite the various headwinds that we have been seeing at the moment.

Having said that, we don't take anything for granted. We continue to analyze the situation very closely, we're running a lot of scenarios, we're having a lot of conversations with our customers.

In fact, we have prepared all the various tools in place and ready to support our customers during times like this. In Malaysia recently, we, as part of the overall industry, announced a program to support SMEs that need assistance during times like this, using cheaper cost of funding from Bank Negara program to then provide competitive financing to customers that need assistance.

We continue to assess the entire situation. At the moment, I think, due to the reshaping of our portfolio over the last few years, that has certainly helped improve the resiliency of our loan book.

Great. Thanks, Novan and Khairul.

That's very useful. Second, can I ask on asset growth?

We shifted to a total assets growth guidance starting this year. You had also shared, I think previously, that demand was still strong in first quarter because of some of the previous pipeline, but the situation is evolving.

Do you see clients scaling back? Is there still demand to hit that loans growth target?

Or your own risk appetite, are you scaling back in the coming quarters?

We are sticking to our risk appetite because we are very clear in terms of the customer segments that we are banking at the moment. Based on discussions with a lot of our customers, the pipeline is still very strong on the wholesale side.

We're still seeing quite a bit of pipeline, especially in Malaysia and Singapore. Those markets continue to remain strong.

We're still maintaining our asset growth guidance as what we guided earlier this year, given the pipeline that we are seeing.

Okay. Thank you.

Maybe just one last one, Touch 'n Go Digital had a profitable year, I think about 100 million apart, there's some articles on it recently on whether it is right time to list. How do you think Touch 'n Go Digital fits into the Forward30 plan?

Do you think it's a bit early on for value unlocking from it or all options are on the table?

Touch 'n Go Digital is a crucial component of Forward30. While the bank in Malaysia bank 8, 9 million customers, Touch 'n Go bank more than 20 million customers.

The value of QR payments has exceeded the value of credit card as well as debit card transactions in Malaysia. It's a crucial part of CIMB in terms of how we serve our customers.

Because if you think about it, we have Touch 'n Go, we have Octo that serves the retail customers, and OctoBiz that serve the non-retail customers. It's a crucial part of the business.

The growth has been extremely strong, a lot stronger than what we initially anticipated, including this year. With regards to any value unlocking, all options are on the table.

We are constantly evaluating the market. We, CIMB, we are the top investment bank in the country.

We do take a lot of our customers to IPO, we do know what the sentiment is in the capital markets at the moment. In certain segments, it has been very, very encouraging.

We will continue to monitor. We're not in a rush, but the business certainly is in the right trajectory.

Great.

Thanks, Novan. Thanks, Khairul.

I'll jump back in queue.

Thank you, Tushar. Thanks, Tushar.

Our next question comes from Yong Hong from Citi. Yong Hong?

Thanks, Steven. Can you hear me?

Yeah.

Thanks. Thanks, Novan.

Thanks, Khairul. The first question is just on guidance for this year.

If the FX drag persists and if the bond market remains challenging, should we be expecting the 11% to 11.5% ROE to come in the form of NII growth for this year? Because we also have this restructuring cost from Thailand later this year, just wondering what can be the offsetting levers.

This is my first question.

Thanks, Yong Hong. The restructuring cost for Thailand has already been incorporated in the 11% to 11.5%, it is already part of that guidance.

If FX continued to be a headwind beyond what we project, then certainly we are looking at other levers, such as our NOII side, which has been performing a lot stronger than what we initially expected. The asset pipeline is as strong as what we have initially anticipated, I think that part is okay.

The other area that we continue to do better than what we budgeted is on the operating expenses. We continue to be very vigilant with cost.

Everyone throughout the organization is relentless about it, and that is something where we continue to see as a potential lever. Certainly, yeah, NOII, opex, those are potential levers.

We also got our capital repayment plan. As November last year we announced up to end '27.

If let's say to your point, market growth is a lot slower than what we initially anticipated, then we always have the flexibility to accelerate the capital repayment because if market is not growing due to macroeconomic conditions, then we should return excess capital to shareholders. We still do have enough levers to ensure that we are within the 11% to 11.5% guidance at the moment.

Maybe just following up on the opex, in your Thai briefing a few weeks ago, there was a opex guidance of 2027 to be flat from '25 levels. There seems to be a cost disciplining or cost savings of about 400 to 500 million next year.

Anyway, can we bring that forward into this year, especially as you were mentioning if there is any earnings risks that could be unforeseeable?

I think we need to be very agile and dynamic on this, and also it's highly dependent on whether we can accelerate some of the cost takeout. A lot of that really depends on how we execute the Thailand transformation.

Like what we highlighted to the market, we are expecting the completion in the early part of fourth quarter, right, and the execution of the cost takeout to be around that time and some of it could potentially spill over into the first quarter, the full realization the first quarter of 2027. We may have some levers to pull the execution of that in the fourth quarter of this year.

Again, we have to be very agile, looking at the revenue. If we need to really push hard, we have some levers to push hard for it to be executed or realized in the fourth quarter of 2026.

Got it. Maybe also following up again on the capital return plan, how should we think about timing of that 1.25 billion residual value?

Because we also have more coming onto our books next year, just wondering how should we be thinking about the timing for the special dividends.

At the end of the day, capital is used to grow, to deliver shareholder returns. If the growth opportunities are not there, and it's more efficient to return excess capital to shareholders, then that is something that we will do.

First option, of course, always is to grow the business. Yep.

This 2 billion that we announced, that should be over and beyond what we are already projecting for that growth, right?

That's correct. You were asking about timing, right, Yong Hong?

We gave ourselves until end '27. Timing means we accelerate it a lot faster, so that one will be subject to what the market environment is at the moment.

Okay. If we spill into next year, then that will basically have an addition for the Thai auto release, right?

That

11 billion ringgit, Thai baht.

That's correct.

That's correct.

Yeah. There are more coming towards the end of the year, and again, we go through the similar thought process.

Are there any opportunities to grow? If the opportunities to grow will yield better shareholder returns for shareholders, then we will take that path.

Of course, if the opportunities to grow do not provide more superior returns to shareholders and it's better off returning the excess capital, then we would do that. We will go through that same thought process.

Got it. Just one small questions.

Earlier there was a comment on the one-off impact on Niaga NIMs. Is that only impacting the first quarter NII, or would this interest expense roll off in second quarter or this will be into new base going forward?

No, it's not going to be a new base. It is a one-off impact that we are taking in the first quarter.

That is a one-off impact coming through on some adjustments on the structured products on interest expense.

If we exclude that, what should be the margins for this quarter?

If we exclude that, on a QoQ basis, right, you saw, firstly, on the reported basis with that one-off impact, you saw it contracting by -5 basis points. Without that impact, it will be in the very low single digit, close to closer to the -2 year-on-year.

Eh, sorry, QoQ. Okay.

Sorry,

first quarter was 2.08, right, the NIM?

Sorry, I'm talking about the

Niaga NIM.

Niaga NIM was impacted by 5 basis points. If you exclude the one-off, it will be closer to -2 QoQ.

Got it. These are all my questions.

Thank you, Novan. Thanks, Khairul.

Thank you, Yong Hong.

Thanks, Yong Hong. Our next question comes from Jin Chin from Affin.

Jit Han?

Hi, Novan. Hi, Khairul.

Hi, Steven. A couple of questions from me.

One, could we get a little bit more color in terms of how much wealth management-related income makes up of CIMB Group's NOII? Within that particular bucket, what's the contribution from bancassurance?

Could we also get a sense in terms of the magnitude of AUMs in terms of sizing and how that's trended beyond just let's say this quarter over the past year or so?

I have to get back to you in terms of that specific number of component in terms of wealth. What I can share off-hand, right, 2/3 of fee and commissions come from consumer.

Roughly about 2/3 come from consumer. That is the base number.

What I can give you a bit of color because I do have the number at hand is on the wealth proportion. The driver for the year-on-year and QoQ is really driven by wealth.

On a year-on-year basis, the banca Singapore wealth is the biggest driver, while the other components of fee income on consumer is fairly flattish. On some areas, it's actually down.

Banca Singapore is really the big driver on a year-on-year basis.

Right. In terms of AUM, how big a size is the total AUM that is actually managed by CIMB Group?

I don't have the number off-hand as well. We'll have to get back to you on that specific AUM number.

Sure. No worries.

Just another question in terms of looking towards 2027 and the 12% to 13% ROE target. Assuming let's say Indo kind of goes below 13%, kind of like the current traction that is actually running after first quarter, how much more does Malaysia, Singapore, even Thailand have to run in terms of ROE to actually match that 12% to 12% to 13% target?

I think in terms of the building blocks to that, right, I think firstly, right, just by the fact that where we are currently, that trajectory let's say from 2025 to 2027, right, there were in 2026, standard when you look at the 2026 guidance of 11% to 11.5%, that includes a one-off restructuring cost coming out from Thailand of 1.6 billion. If you look at the building blocks, right, so that is, that will give 10 to 20 basis points uplift to 2026 ROE, so that's the first component.

The second component is another 10 to 20 basis points coming from the Thai transformation, fueled by two things: one is the absence of the loss-making auto business; secondly, as what you have heard from us in terms of the strategy execution on wealth and the ASEAN corporate network, doubling down on that segment. That will give another 10 to 20 basis points also.

For Thailand itself, in 2027, that will give us 10 to 20 sorry, 20 to 40 basis points uplift to our 2026 ROE. Another component is the capital return program, right.

The capital return program, the remaining 1.3 billion, will give us anything between 10 to 15 basis points uplift to the 2026 ROE. You are already stacking up quite close to the bottom end of the 12% to 13% ROE guidance.

The remaining components is really our execution of CASA and also cross-sell. Cross-sell is wealth and also wholesale banking.

CASA, our growth in terms of CASA, both on the retail and non-retail.

Got it. Thank you so much, Khairul and Novan.

Thank you.

Thanks, Jin Chin. Once again, if you would like to ask a question, please use the raise hand function and we will unmute your line from there.

It appears that we have no further questions, Novan. Yes, please, I'll just pass it back to you for your closing remarks.

Thank you very much for your time today to join us on this call. As I just want to reiterate that despite all the headwinds that we're seeing, we're maintaining our guidance.

Really coming from the point of view where our business on the NII side, we're still seeing very strong asset and loan growth in the pipeline, NIMs are bottoming out. On the NOII side, that has been a big outperformer in the first quarter this year, and we're expecting this to continue to perform very, very strongly.

Opex, team has been extremely disciplined, you've seen reduction in opex numbers, this is something that we'll continue to be very, very vigilant about. Asset quality remain to be very strong, also mainly as a result of the disciplined growth that we've put in over the last few years, the fact that we've reshaped our portfolio to focus on the better-quality customer segments, and will continue to be very vigilant on capital.

Put together all these points is how we will continue to execute Forward30 and to maintain our guidance this year of 11% to 11.5%. There are headwinds, whether is it inflation or whether is it on the FX side, but this is where we remain dynamic and continue to move the various levers to offset any headwinds that we see.

With that, have a good public holiday tomorrow, Selamat Hari Raya to those celebrating, thank you very much.

Ladies and gentlemen, that concludes our briefing for today. Once again, thank you for joining us, and I wish you a very good evening ahead.